Optimal Retail Pricing, Interest Rate, and Interest Allocation Ratio Decisions in an Online Platform-Assisted Financing System

Dianyao KANG; Mingming LENG

doi:10.1016/j.orl.2025.107268

Optimal Retail Pricing, Interest Rate, and Interest Allocation Ratio Decisions in an Online Platform-Assisted Financing System

Dianyao KANG, Mingming LENG^*

^*Corresponding author for this work

Research output: Journal Publications › Journal Article (refereed) › peer-review

Abstract

We examine an online financing system involving a platform, a bank, and a retailer, in which the bank makes the optimal interest rate decision before the bank-platform negotiation for the interest allocation ratio (scenario 1) or after the interest allocation ratio negotiation (scenario 2). We find that the retailer's sales and profits in scenario 1 are higher than those in scenario 2. Moreover, if the referral fee rate increases, the system-wide profit and the system efficiency for scenario 1 increase but those for scenario 2 decrease.

Original language	English
Article number	107268
Journal	Operations Research Letters
Volume	60
Early online date	25 Feb 2025
DOIs	https://doi.org/10.1016/j.orl.2025.107268
Publication status	E-pub ahead of print - 25 Feb 2025

Bibliographical note

Publisher Copyright:
© 2025

Funding

This research paper was supported by the General Research Fund (GRF) of the Hong Kong Research Grants Council under Research Project No. LU13500822.

Keywords

Nash bargaining
Platform financing
Sequential-move game

Access to Document

10.1016/j.orl.2025.107268

Cite this

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title = "Optimal Retail Pricing, Interest Rate, and Interest Allocation Ratio Decisions in an Online Platform-Assisted Financing System",

abstract = "We examine an online financing system involving a platform, a bank, and a retailer, in which the bank makes the optimal interest rate decision before the bank-platform negotiation for the interest allocation ratio (scenario 1) or after the interest allocation ratio negotiation (scenario 2). We find that the retailer's sales and profits in scenario 1 are higher than those in scenario 2. Moreover, if the referral fee rate increases, the system-wide profit and the system efficiency for scenario 1 increase but those for scenario 2 decrease.",

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AU - LENG, Mingming

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N2 - We examine an online financing system involving a platform, a bank, and a retailer, in which the bank makes the optimal interest rate decision before the bank-platform negotiation for the interest allocation ratio (scenario 1) or after the interest allocation ratio negotiation (scenario 2). We find that the retailer's sales and profits in scenario 1 are higher than those in scenario 2. Moreover, if the referral fee rate increases, the system-wide profit and the system efficiency for scenario 1 increase but those for scenario 2 decrease.

AB - We examine an online financing system involving a platform, a bank, and a retailer, in which the bank makes the optimal interest rate decision before the bank-platform negotiation for the interest allocation ratio (scenario 1) or after the interest allocation ratio negotiation (scenario 2). We find that the retailer's sales and profits in scenario 1 are higher than those in scenario 2. Moreover, if the referral fee rate increases, the system-wide profit and the system efficiency for scenario 1 increase but those for scenario 2 decrease.

KW - Nash bargaining

KW - Platform financing

KW - Sequential-move game

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U2 - 10.1016/j.orl.2025.107268

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M3 - Journal Article (refereed)

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JO - Operations Research Letters

JF - Operations Research Letters

M1 - 107268

ER -

Optimal Retail Pricing, Interest Rate, and Interest Allocation Ratio Decisions in an Online Platform-Assisted Financing System

Abstract

Bibliographical note

Funding

Keywords

Access to Document

Other files and links

Should Delivery-Time Ratings be Disclosed in Online Markets? Optimal Pricing and Promised Delivery Time Decisions with Theoretical Models Supported by Empirical Data

Cite this

Optimal Retail Pricing, Interest Rate, and Interest Allocation Ratio Decisions in an Online Platform-Assisted Financing System

Abstract

Bibliographical note

Funding

Keywords

Access to Document

Other files and links

Projects

Should Delivery-Time Ratings be Disclosed in Online Markets? Optimal Pricing and Promised Delivery Time Decisions with Theoretical Models Supported by Empirical Data

Cite this